Perry Appointee to UT Regents Linked to Scandals

One of the three men Governor Perry appointed to the University of Texas Board of Regents last week has been linked to political scandals at opposite ends of the Rio Grande, according to several news outlets. The appointee is James Dannenbaum, chairman of Houston-based Dannenbaum Engineering Corporation, whose company has become enmeshed in corruption probes in Brownsville and El Paso.

The following summary of the situation in Brownsville represents my summary of stories done by investigative reporter Emma Perez-Trevino for the Brownsville Herald. The original stories can be found here and here. In the Brownsville case, the Port of Brownsville wanted to work with Mexico to build a bi-national bridge to Matamoros, Mexico. Brown & Root won the contract to work on the bridge and billed the Brownsville Navigation District (BND) $424,505 up through July 1997. That’s when a familiar name entered the picture: state senator Eddie Lucio. The Brownsville Herald has reported that Dannenbaum Engineering Corporation (DEC) hired Lucio for marketing, consulting, and public relations work. In the course of this work, Lucio introduced the firm to the BND board. Within a month, the BND board voted to fire Brown & Root and hired DEC without requesting proposals. DEC’s original contract was for $2,053,515, but a series of supplemental contracts brought DEC’s take to $15.5 million. Of this money, $10,529,058 went to subcontractors in Mexico, $9.2 million of which was paid to just three companies, all of which had ties to a DEC employee. One helps startup businesses, one provides security services, and one is a real estate company. BND was required to approve all subcontracts before any work was done, but DEC entered into 16 of 17 subcontracts without requesting that approval.

Construction of the bridge depended upon securing an agreement with Mexico to perform work on its side of the Rio Grande, which DEC representatives said was forthcoming. Despite such assurances, BND never received approval from Mexico. This is not a bridge to nowhere. It is a nowhere bridge.

In 2004, BND retained Charley Willette, Jr., as a special counsel to investigate how a total of $21.4 million in taxpayer money was spent on a project that was dependent upon Mexico’s support. Willete’s 62-page report traced the millions paid to subcontractors in Mexico and their ties back to DEC.

Peter Zavaletta, who became chairman of the Navigation District in 2004, told the Brownsville Herald that the only work that BND received was 49 black binders in which were a couple of charts.

Perez-Trevino reported in May that a criminal inquiry into the money that was spent on the nonexistent bridge is in the hands of a special grand jury, whose term will expire in early November. Both the FBI and the Texas Rangers began looking into the situation last March.

The El Paso situation is less complex. A United Press International story last June referenced “Dannenbaum Construction” in a wide ranging federal probe in El Paso:

EL PASO, Texas, June 13 (UPI) — A Texas man once named by President George Bush to the International Boundary and Water Commission has been labeled a “bagman” in a corruption case.

John Travis Ketner, former chief of staff to El Paso County Judge Anthony Cobos, pleaded guilty Friday to conspiracy to commit bribery. Arturo Duran, who also is a member of the board of Thomason Hospital in El Paso, was identified as one of 17 co-conspirators in the case, the El Paso Times reported.

Federal investigators say Duran served as a go-between for two companies, Valley Risk Consulting and Dannenbaum Construction. The companies were after contracts from County Commissioners Court.

In a story about the El Paso investigation that appeared in the Herald, Perez-Trevino reported about Dannenbaum’s role in the federal investigation in El Paso. These are the salient paragraphs:

In El Paso, Dannenbaum’s firm allegedly is referenced as “DC” in an information report that the U.S. Attorney’s Office filed in the U.S. District Court for the Western District of Texas on a guilty plea entered by John Travis Ketner, former chief of staff to El Paso County Judge Anthony Cobos.

Ketner pleaded guilty June 8 to two counts of conspiracy to commit mail fraud, one count of conspiracy to commit wire fraud, and one count of conspiracy to commit bribery in connection with his role in a conspiracy to fraudulently secure vendor contracts, public records show.

The El Paso Times identified “DC” as “Dannenbaum Construction” of Houston.

Noting that the name of his firm is Dannenbaum Engineering and not Dannenbaum Construction, Dannenbaum said, “our firm was not named in anything, was not referenced in anything.”

According to the information report, Ketner and co-conspirators would meet with selected vendors to discuss the contracts being sought by the vendors and to settle on the amount of a bribe.

A co-conspirator allegedly acted as the intermediary and “bag man” for “DC,” making and promising payments in cash or as campaign contributions to elected county officials, the information report reflects.

The report shows that on one occasion, a “DC” principal met with a county elected official. The intermediary and the elected official then entered a small bathroom in the county office and the intermediary promised a campaign contribution in exchange for the official’s votes to secure contracts for “DC”.

Dannenbaum said that he did not have an intermediary, did not meet with the elected official and that no one from his office did. “Not to my knowledge,” he said.

The question that naturally arises out of all this is what is going on in the governor’s office? It seems to me there are only two possibilities here: Perry (1) didn’t know or (2) didn’t care. Even if he believes that Dannenbaum and his company have done nothing wrong (and to this point nothing official suggests otherwise), Perry has put UT in a position where one of his appointees can reflect discredit on the university. There are plenty of Texans who aren’t enmeshed in criminal investigations in two cities who are qualified to be on the Board of Regents.

The other question is whether ethics rules–allow a state senator to operate a consulting business in which he introduces vendors to public officials who award contracts. I don’t see how the answer can be “yes,” but if it is, the rules need to change. I don’t think Lucio is the only one who plays this game.

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